Agency relations: legitimate withdrawal for just cause

The Cassation Court, in ruling no. 6915 published on 11 March 2021 ruled on the applicability of withdrawal for just cause from agency contracts as contained in art. 2119 of the Civil Code for employment contracts. The Supreme Court in confirming the applicability of this institution to agency contracts as well, underlined how, for the purposes of assessing the seriousness of the conduct, needs to take into consideration that in the area of agency contracts the relationship of trust assumes greater intensity compared to employment. Therefore, for the purposes of legal withdrawal an event of lesser severity is sufficient.

Facts of the case

The ruling of the Supreme Court is based on a judgement of the Rome Appeals Court that had rejected an appeal submitted by an agent against withdrawal for just cause notified by the petitioner company.

In the case in question, the petitioner company had withdrawn for just cause, because, while performing the agency contract, the agent had contacted other agents, its collaborators, with the aim of involving them in an activity in competition with it.

According to the Court of Appeals, this conduct amounted to the violation of art. 1746 of the Civil Code according to which, in performing the engagement, the agent must protect the interests of the petitioner and act in compliance with the principles of loyalty and good faith. The Court of Appeals had reached the conclusion that the violation of this duty, regardless of the positive or negative outcome of the initiative, constitutes a behaviour in contrast with the essential duties of the agent amounting to a case of just cause for withdrawal as per art. 2119 of the Italian Civil Code.

The agent appealed to the Cassation Court against the judgement of the Court of Appeals.

The Supreme Court of Cassation’s ruling

The Court of Cassation, in rejecting the appeal submitted by the agent, reiterated that, “the institution of withdrawal for just cause as per art. 2119 of the Civil Code is also applicable to the agency contract, however needing to take into account, for the assessment of the seriousness of the conduct which in this latter area the relationship of trust – corresponding to the greater autonomy of management of the activity for places, times, procedures and means based on achievement of the company purposes – assumes greater significance compared to employment.

Consequently, according to the Court, “for the purposes of the lawfulness of the withdrawal, the fact of a lesser severity is sufficient, according to an assessment referred to the lower court judge and at his discretion in terms of lawfulness if adequately and correctly substantiated”.

However, again according to the Court, referring to a consolidated opinion, “ in order to assess the worker’s compliance, it is necessary to look at the typical elements of the two relationships with the consequence that similarity between the two legal cases is only valid when not in conflict with such elements”.

In conclusion, the Court of Cassation believes that the Court of Appeals would have correctly confirmed what was established by the judge of first instance who had identified the existence of a just cause for withdrawal in the agent’s initiative to want to solicit the petitioner’s collaborators to direct them to a business activity he wanted to start up. This is based on the premise that violation of the agent’s obligation of loyalty is recognisable in any activity that can harm the petitioner regardless of the fact that, as in the case in hand, the solicitation did not actually take place. 

Other related insights:

• Commission accrued by a “coordinator” agent should not to be included in the calculation of the termination indemnity payable under agency agreements
• The remedy of reinstatement presumes the conscious abuse of the employer’s disciplinary power